Federal District Court Partially Guts Regulations Affecting the No Surprises Act Arbitration Process

Posted by James R. Billings-Kang on March 30, 2022
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On February 23, 2022, the U.S. District Court for the Eastern District of Texas gutted portions of the interim final rule affecting the independent dispute resolution (“IDR”) process of the No Surprises Act (the “Act”). Tex. Med. Ass’n v. U.S. Dep’t of Health & Human Servs., No. 6:21-cv-425-JDK, 2022 WL 542879, at *15 (E.D. Tex. Feb. 23, 2022). In particular, the Court found that the rule did not square with the plain language of the Act, which mandates that the IDR process equally consider a number of factors in deciding payments for out-of-network (“OON”) services. Id. at *7–9. Instead, the rule substantially favored one factor over the others. In further rejecting the IDR-related portions of the rule, the Court found that the government had failed to provide an opportunity for notice and comment in advance of publishing the interim final rule. Id. at *10–14. As a result, the Court granted the plaintiffs’ motion for summary judgment, denied the defendants’ cross-motion for summary judgment, and severed portions of the rule. Id. at *15.

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Fourth Circuit Adopts Safeco Scienter Standard to Prove False Claims Act Violation in Legal Falsity Cases

Posted by James R. Billings-Kang on March 09, 2022
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A few weeks ago, the U.S. Court of Appeals for the Fourth Circuit answered a critical inquiry in the False Claims Act (“FCA”) context: does a defendant violate the FCA when its reading of the regulation is objectively reasonable and there is no government guidance discouraging or rejecting that interpretation? Answering in the negative in a 2-1 decision, the court affirmed the dismissal of the case and injected into FCA cases the requisite state of mind (i.e., scienter) for violating a regulation as set out in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S. Ct. 2201 (2007) by the U.S. Supreme Court. United States ex rel. Sheldon v. Allergan Sales, LLC, 24 F.4th 340, 347–48 (4th Cir. 2022). In doing so, the Fourth Circuit joined the ranks of five other circuit courts that had considered the issue. Disturbed by the exceedingly complex Medicaid rules at issue that were open to varying interpretations and the constitutional implications of “the veritable thicket of Medicaid regulations, “labyrinthine reporting requirements,” and “the most completely impenetrable texts within human experience,” the Fourth Circuit placed the onus on the government “to indicate a way through the maze.” Id. at 344, 350, 352 (internal quotations and citations omitted).

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